Indians Acquire Property Abroad?

33. Can residents avail of this facility for acquiring immovable property and other assets abroad?

Yes. Individuals are free to use this Scheme to acquire and hold immovable property, shares or any other asset outside India without prior approval of RBI.

34.Can individuals open a foreign currency account abroad for making remittance under the scheme?

Yes. Individuals are free to open, hold and maintain foreign currency accounts with a bank outside India for making remittances under the Scheme without the prior approval of RBI. The account can be used for putting through any transaction connected with or arising from remittances under the Scheme.

35.What is the impact of the Scheme on the existing facilities for private/business travel, gift, donation, studies, medical treatment etc./items covered in Schedule III of Foreign Exchange Management (Current Account Transactions) Rules, 2000?.

The facility under the Scheme is in addition to those already available under Foreign Exchange Management (Current Account Transactions) Rules, 2000.

36. Can an individual send remittance under the Scheme to any country?

Remittance cannot be made directly or indirectly to Bhutan, Nepal, Mauritius or Pakistan. The facility is also not available for making remittances directly or indirectly to countries identified by the Financial Action Task Force (FATF) as ‘non-co-operative Countries or Territories' viz., Cook Islands, Egypt, Guatemala, Indonesia, Myanmar, Nauru, Nigeria, Philippines and Ukraine.

Further, remittance under the facility cannot be made to individuals and entities identified as posing significant risk or committing acts of terrorism as advised to banks by RBI from time to time.

37.What are the requirements to be complied with by the remitter?

The individual will have to designate a branch of an AD through which all the remittances under the Scheme will be made. He has to furnish an application-cum-declaration in the specified format regarding the purpose of the remittance and declare that the funds belong to him and will not be used for purposes prohibited or regulated under the Scheme.

38.If an investment of USD 25,000 rises in value within the year, can one book profits and invest abroad again?

The investor is free to book profit or loss abroad and to invest abroad again. He is under no obligation to repatriate the funds sent abroad.

39. Can an individual, who has repatriated the amount sent during the calendar year, avail of the facility once again?

Once a remittance is made for an amount upto USD 25,000 during the calendar year, he would not be eligible to make any further remittances under this route, even if the proceeds of the investments have been brought back into the country.

40. Can remittances be made only in US Dollars?

The remittances can be in any currency equivalent to USD 25,000 in a calendar year.

41.Last year, resident investors could invest in equities of overseas listed firms that hold at least 10% in a listed Indian firm. Does this condition still apply?

The stipulation that investors could invest in equities of overseas listed firms that hold at least 10% in a listed Indian firm which was made in terms of our A.P.(DIR Series) Circular No.66 dated January 13, 2003 continues as an additional facility. Under the current Liberalized Remittance Scheme, no such stipulation has been made.

42.Can an individual investor sign-on with an international online brokerage and buy and sell stocks ( without exceeding the USD 25,000 limit)?

The Scheme does not restrict such transactions, provided the transactions are within the limit of USD 25,000 per calendar year and is otherwise in order.

For further details/guidance, please approach any bank authorized to deal in foreign exchange or contact Regional Offices of the Foreign Exchange Department of the Reserve Bank.

Page Three Continued From Page Two  (Go to Page Two)

27. Can a resident open a foreign currency denominated account in India?

Persons resident in India are permitted to maintain foreign currency accounts in India under following two Schemes:

1. EEFC Accounts:

To avoid exchange loss on conversion of foreign exchange into Indian Rupee & Rupee into foreign exchange, residents can retain up to 50% of foreign currency remittances received from abroad in a foreign currency account, viz., EEFC account, with an authorized dealer in India.

Funds held in EEFC account can be utilized for current account transactions and also for approved capital account transactions as specified by the extant Rules/Regulations/Notifications/Directives issued by the Government/RBI from time to time.

b. RFC Accounts: Returning Indians, i.e., those Indians, who were non-residents earlier, and are returning now for permanent stay, are permitted to open, hold and maintain with an authorized dealer in India a Resident Foreign Currency (RFC) Account to keep their foreign currency assets.

Assets held outside India at the time of return can be credited to such accounts. The foreign exchange (i) received or acquired as gift or inheritance from a person referred to sub-section (4) of section 6 of FEMA,1999 or (ii) referred to in clause (c) of section 9 of the Act or acquired as gift or inheritance therefrom may also be credited to this account.

The funds in RFC account are free from all restrictions regarding utilization of foreign currency balances including any restriction on investment outside India. The facility is also available to residents provided foreign exchange to be credited to such account is received out of certain specified type of funds/accounts.

c. RFC (Domestic)Account:

A person resident in India can open, hold and maintain with an authorized dealer in India, a Resident Foreign Currency (Domestic) Account, out of foreign exchange acquired in the form of currency notes, Bank notes and travelers cheques from any of the sources like, payment for services rendered abroad, as honorarium, gift, services rendered or in settlement of any lawful obligation from any person not resident in India.

The account may also be credited with/opened out of foreign exchange earned like proceeds of export of goods and/or services, royalty, honorarium, etc., and/or gifts received from close relatives (as defined in the Companies Act) and repatriated to India through normal banking channels by resident individuals.

28. Can a person resident in India hold assets outside India?

In terms of sub-section 4, of Section (6) of the Foreign Exchange Management Act, 1999, a person resident in India is free to hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India or inherited from a person who was resident outside India.

29. What is the liberalized Remittance Scheme of USD 25,000?

This is a new facility extended to all resident individuals under which they may freely remit up to USD 25,000 per calendar year for any permissible current or capital account transaction or a combination of both.

30.Who is eligible to avail of this Liberalized Remittance Facility?

The facility is available to resident individuals only.

31.Is there any frequency for the remittance?

Resident individuals can avail of the remittance facility under the Scheme once in a calendar year.

32. What are the purpose/s for which remittance can be made under the Scheme?

This facility is available for making remittance/s for any permissible current or capital account transaction or a combination of both.

It is not available for purposes specifically prohibited (Schedule I) or regulated by the Government of India (Schedule II) of Foreign Exchange Management (Current Account Transactions) Rules, 2000.

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